The Euro struggles near a two-month high as firmer US Treasury yields and Middle East tensions limit upside despite stronger Eurozone sentiment.
EUR/USD trades around 1.1578 after retreating from a two-month peak of 1.1614, pressured by a steadying US Dollar. The Greenback’s resilience follows a rise in US Treasury yields, offsetting stronger-than-expected Eurozone economic sentiment data for August.
The Eurozone ZEW Economic Sentiment Index climbed to 31.4 in August from 23.4, surpassing forecasts of 25.4. Meanwhile, US ADP Employment Change data showed a four-week average increase to 9.5K from 8.25K, though weaker US economic trends have tempered Fed rate-hike expectations.
Markets now price a 65% chance the Federal Reserve will hold rates steady next month, down from earlier hike expectations. Geopolitical risks, including US-Iran tensions, continue to cloud the inflation outlook and weigh on sentiment.